Question 1
Suppose a demand curve has the form X = 20 - 2P. What is the
quantity consumed at P = 2? What is the price elasticity of demand at P=2?
Round your answer to two decimal places.
Question 2
Suppose Julio has uncertainties in his income where the
probability of being sick is 0.3, the probability of being healthy is 0.7,
income when sick is 2,000, and income when healthy is 4,500. Also, let Julio's
utility function be U(Income) = 2*Income. What is Julio's expected income? What
is Julio's expected utility?
Question 3
In an attempt to cut costs, the largest employer in the area
increases the coinsurance rate for employee health coverage from 10 percent to
20 percent. As a result
Answers:
A.
the demand curve for medical care rotates downward pivoting
off the point where the curve crosses the horizontal axis.
B.
the demand curve for medical care rotates upward pivoting
off the point where the curve crosses the horizontal axis.
C.
the demand curve for medical care shifts to the left.
D.
the demand curve for medical care shifts to the right.
Question 4
The Oregon Medicaid study's primary finding is that
Answers:
A.
usage increased, and there were significant gains in health.
B.
health increased, but usage rates remained stable.
C.
usage increased, but there was little to no effect on
health.
D.
health declined and there was an increase in usage.
Question 5
2 out of 2 points
A negative cross price elasticity of demand for generic
bandaids and neosporin would indicate that the two goods are _______.
Answers:
A.
complements
B.
normal
C.
substitutes
D.
inferior
Question 6
What are two serious cons of using observational data?
Answers:
A.
the data are relatively expensive to collect and are also
potentially subject to adverse selection
B.
the data are relatively expensive to collect and are not random
C.
there are no cons to using observational data
D.
the data are not random and are also potentially subject to
adverse selection
Question 7
The overall empirical finding for health insurance and
health shows
Answers:
A.
that health insurance causes improvements in health while
health does not cause improvements in health insurance.
B.
a positive relationship between the two.
C.
a negative relationship between the two.
D.
an inconclusive relationship between the two.
Question 8
Which of the following is NOT a determinant of demand for
medical care?
Answers:
A.
number of medical care providers
B.
genetic makeup
C.
lifestyle choices
D.
educational attainment
Question 9
Another name for fixed dollar subsidy is
Answers:
A.
ad valorem
B.
indemnity
C.
coinsurance
D.
deductible
Question 10
Suppose consumers go from having no insurance to holding
insurance with an ad valorem subsidy. As a result, the demand curve for medical
care
Answers:
A.
none of the other answers
B.
remains unchanged
C.
rotates inward
D.
rotates outward
Question 11
Imagine you are giving the two data points (2,5) and (1,10)
as quantity, price points on a demand curve. What is the arc elasticity?
Answers:
A.
-1/2
B.
-3/4
C.
-1
D.
0
Question 12
The 2008 Oregon Medicaid study is a great example of (a)
_______________ .
Answers:
A.
observational data
B.
natural experiment
C.
government program that definitively improved health for the
participants
D.
randomized control trial
Question 13
Which of the following is NOT a research issue addressed by
the HIE?
Answers:
A.
How does cost sharing affect demand for medical care?
B.
How does a change from fee-for-service payment to capitation
payment affect demand for medical care?
C.
Does use of medical care improve health?
D.
How does a change in the underwriting process laws affect
the demand for medical care?
Question 14
Suppose that medical price inflation increases in the
Grossman model. What happens to the cost of capital capital and the optimal
stock of health?
Answers:
A.
the cost of capital increases and the optimal stock of
health decreases
B.
the cost of capital declines and the optimal stock of health
increases
C.
the cost of capital increases and the optimal stock of
health increases
D.
the cost of capital declines and the optimal stock of health
decreases
Question 15
A self control problem is associated with _________________ preferences.
Answers:
A.
time inconsistent
B.
myopic
C.
rational
D.
backward-looking
Question 16
A parent's health history and an individual's closeness to
negative consequences of an unhealthy behavior change can impact
______________ over time, which can
change decision making.
Answers:
A.
probabilities
B.
flows
C.
health
D.
none of the other answers
Question 17
______________ is a great example of exchanging a short term
cost for a long term gain.
Answers:
A.
Drinking excessively
B.
Smoking
C.
Exercise
D.
There is not enough information to answer this question
Question 18
Household production functions were pioneered by
______________ and used by _______________ to describe the production of
health.
Answers:
A.
Adam Smith; David Ricardo
B.
Frank Sloan; Chee-Ruey Hsieh
C.
Jimmy Fallon; Justin Timberlake
D.
Gary Becker; Michael Grossman
Question 19
2 out of 2 points
Why are mortality measures disadvantaged for measuring
health capital?
Answers:
A.
systemic errors occur naturally when measuring mortality
B.
they do not measure mortality accurately enough
C.
none of the other answers
D.
they do not account for quality of life
Question 20
Given that a person purchases cigarettes, a change in the
number of cigarettes smoked is an example of a(n) ______________.
Answers:
A.
effective demand
B.
nominal demand
C.
intensive margin
D.
extensive margin
Question 21
Discounting involves _______ by image to obtain the _______
. (Note that r can also be represented with i.)
Answers:
A.
dividing a fixed sum; present value
B.
multiplying the past sum; willingness to pay of net benefits
C.
dividing the past sum; willingness to pay of net benefits
D.
multiplying a fixed sum; present value
Question 22
What field of economics challenges the standard economic
approach?
Answers:
A.
industrial organization
B.
labor
C.
health
D.
behavioral
Question 23
Bounded rationality is
Answers:
A.
when people view losses different than gains.
B.
when emotions play a significant role in decision making.
C.
when people have a tendency to take a smaller reward now vs.
a larger reward later as now and later get closer and closer together in time.
D.
when people may not be able to evaluate pros and cons of
alternative options because of cognitive limitations.
Question 24
Suppose that educational attainment increases in the
Grossman model because an individual goes to graduate school and earns a MBA
with a health care concentration. What happens to the cost of capital capital
and the optimal stock of health?
Answers:
A.
the cost of capital remains stable and the optimal health
stock increases
B.
the cost of capital decreases and the optimal health stock
remains stable
C.
the cost of capital increases and the optimal health stock
decreases
D.
the cost of capital and optimal health stock changes are
ambiguous
Question 25
Preferred risk selection is associated with
Answers:
A.
exogenous shocks.
B.
cream skimming.
C.
job locking.
D.
single-payer insurance.
Question 26
2 out of 2 points
The gain from insurance _____ as the probability of getting
sick approaches _____.
Answers:
A.
increases; 0
B.
increases; 1
C.
decreases; either 0 or 1
D.
remains unchanged; 1
Question 27
To what does moral hazard refer?
Answers:
A.
A situation in which consumers are encouraged to exercise
more
B.
A situation in which you go have a snack
C.
A situation in which consumers alter their behavior when
provided with health insurance
D.
A situation in which producers alter their behavior because
of a monetary incentive
Question 28
2 out of 2 points
Which of the following is an example of the moral hazard
problem?
Answers:
A.
A consumer drives a car more carefully after acquiring car
insurance.
B.
A consumer exercises more after obtaining a long term
disability insurance policy.
C.
A consumer visits a doctor more frequently after acquiring
health insurance.
D.
A consumer eats healthier.
Question 29
_______ is a public insurance program intended to cover
economically disadvantaged individuals.
Answers:
A.
Medicaid
B.
Medicare
C.
Blue Cross
D.
Medigap
Question 30
Adverse selection in insurance markets typically occurs
when:
Answers:
A.
employees choose to self-insure.
B.
insurers have better information on the consumers' health
than do consumers.
C.
consumers have better information on their health than do
insurers.
D.
employers insist on a single plan for all clients.
Question 31
Let loading equal 1.4, coinsurance equal 0.5, the price of
medical care equal $40, and the number of units of medical care equal 500. How
much should the health insurance premium cost?
Answers:
A.
14,000
B.
24,000
C.
12,000
D.
600
Question 32
Insurance premiums determined by a(n) _______ are based on
various identifiable characteristics such as health history that place
individuals or groups into different risk categories.
Answers:
A.
community rating
B.
group model
C.
staff model
D.
experience rating
Question 33
Consider the expected utility and maximum willingness-to-pay
to avoid expected loss model with a risk averse individual. What happens if the
utility of wealth pivots downward?
Answers:
A.
The individual is willing to pay a smaller premium over the
expected loss to obtain insurance.
B.
The individual is willing to pay a larger premium over the
expected loss to obtain insurance.
C.
There is not enough information to answer this question.
D.
The individual's willing to pay a premium over the expected
loss to obtain insurance is unchanged.
Question 34
Assume a Rothschild and Stiglitz (1976) scenario with two
people and two insurance policy options. What happens to the premium
differential as a result of the scenario?
Answers:
a.
it depends on whether the two people survive illnesses in
the plan year
b.
it depends on the role moral hazard plays
c.
it contracts
d.
it increases
Question 35
What is a loading factor?
Answers:
A.
It is the different between the total assets and medical
liabilities. It can also be thought of as the opportunity cost of insurance.
B.
It is a term about stuff and things.
C.
It is the difference between the total premium and
actuarially fair premium. It can also be thought of as the price of insurance.
D.
It is the different between the total liabilities and
medical assets. It can also be thought of as the opportunity cost of insurance.
Question 36
Which of the following is a positive statement?
Answers:
A.
You should exercise 3-5 times a week to perform at your
best.
B.
We ought to raise taxes to pay for more "free"
medical care.
C.
I believe the health economy looks good in the next quarter.
D.
As the price falls, the quantity demanded of health care
will rise, all else held constant.
Question 37
Graphically, the relationship between GDP per capita and
life expectancy at birth in the world is
Answers:
A.
conniving.
B.
conventional.
C.
convex.
D.
concave.
Question 38
Which of the following is a possible definition of GDP per
capita?
Answers:
A.
The per person market value of all final goods and services
produced within a country during a given period of time.
B.
The modal income of all residents in a country during a
given period of time.
C.
The per person market value of all income earned by native
born citizens of a country during a given period of time.
D.
The median income of a citizen in a country during a given
period of time.
Question 39
Equity is concerned with
how society purposefully uses its resources to maximize
welfare.
Answers:
how fairly economic resources are distributed.
how society purposefully uses its resources to maximize
welfare.
justice and peace within countries.
ensuring the greatest good for the right people.
Question 40
Compared to the U.K., in the past 50 years, total
expenditures on health care as a percent of GDP
Answers:
A.
has grown at approximately the same rate in the U.S.
B.
none of the other answers.
C.
has grown considerably more in the U.S.
D.
has grown and, overall, shrunk in the U.S.
Question 41
Which of the following best describes technical efficiency?
Answers:
A.
Increasing the amount of hospital beds available such that
each person in the population served has a bed allocated to him/her.
B.
Consuming a medical service at the point where the marginal
benefit exceeds the price.
C.
Constructing a new medical facility with the lowest possible
combination of inputs.
D.
Eating Cheetos until you cannot eat any more
Question 42
Which of the following is an example of a normative
statement?
Answers:
A.
We ought to provide accessible health care to everyone.
B.
Iran has a nuclear weapon.
C.
California is located west of Texas.
D.
The sky is blue.
